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TRANSCRIPT
QUARTERLY REPORT
Q3 2013 (UNAUDITED)
2
Contents
Q3 2013 in Brief __________________________________________________________________________________________ 3
Selected Highlights _______________________________________________________________________________________ 4
Outlook ____________________________________________________________________________________________________ 5
About Cxense _____________________________________________________________________________________________ 5
Condensed Financial Report _____________________________________________________________________________ 8
Consolidated Income Statement ______________________________________________________________________ 10
Consolidated Statement of Financial Position ________________________________________________________ 11
Consolidated Statement of Cash Flow ________________________________________________________________ 13
Notes to the Consolidated Financial Statements _____________________________________________________ 14
OFFICE LOCATIONS
North America Latin America Japan Europe Asia Pacific
Boston, MA
Cxense, Inc. 30 Turnpike Road Southborough, MA 01772 USA
Buenos Aires, Argentina
Victoria Ocampo 360 Piso 3 Puerto Madero Ciudad de Buenos Aires Argentina
Tokyo, Japan
Cxense Co., Ltd. SU Building 204 3-1 Uguisudani-cho, Shibuya-ku Tokyo, 150-0032, Japan
London, UK
Cxense UK 5 Regent St. Charles House, 5th Floor United Kingdom
Melbourne, Australia
Cxense Australia Pty Ltd Level 2, 84 William Street Melbourne, 3000 Australia
San Francisco, CA xxxxx
Cxense, Inc. 1625 El Camino Real, Suite 2 Belmont, CA 94002 USA Miami, FL
Cxense Latin America Suite 232, 4801 South University Drive Davie, FL 33328 USA
Oslo, Norway (Corporate Headquarters)
Cxense AS Henrik Ibsens gate 100 P.O. Box 2920 Solli NO-0230 Oslo, Norway
3
Q3 2013 in Brief
Q3 2013 was another exciting quarter for Cxense as the Company signed 11 new Software-as-a-Service
(SaaS) contracts for our portfolio of recurring software license revenues. The Q3 2013 revenues for the
Cxense SaaS segment amounted to USD 1.1 million, a growth of 64% compared to Q3 2012 revenues of
USD 0.67 million.
Of the eleven new contracts, three were signed in EMEA, four in America and four in Japan confirming
ongoing sales momentums in all our main regions. Three of the new contracts were up-sells of new
solutions to existing customers, which shows that our customers are pleased with existing deployed
solutions and that there is growth potential in already established customer relationships.
New customers were predominantly premium online
news and magazine publishers, but Cxense also signed
Nippon Television, one of the leading broadcasters in
Japan.
During the third quarter, Cxense secured new
customers across all our main solution areas, but with
Cxense Analytics and Content in the majority of the
deals. Analytics is becoming increasingly popular as a
stand-alone product with a rapidly increasing revenue
stream. The Cxense Analytics solution is easy to
deploy, and, with the recently developed features such
as customizable dashboards and wallboards, it has
become a unique tool for publishers who want
understand their audience and use that
understanding to plan advertising, subscription, and
content optimization strategies.
During the third quarter we employed a dedicated Head of Onboarding and Customer Success. This has
already resulted in the introduction of new standardized onboarding project management processes
and follow-up tools, and we see a positive trend with respect to reduced customer go-live time.
After the end of the quarter, on November 15th 2013, Cxense closed and announced the acquisition of
Emediate, the leading Nordic ad server technology, for USD 10 million. The acquisition more than
doubles the Cxense SaaS revenue base and creates the opportunity for sales growth synergies going
forward. The acquisition of Emediate adds around 150 new customers, predominantly Northern
Europe-based publishers, where we can upsell the Cxense Solution Suite. Emediate is known for an
efficient high quality ad serving offering supported by excellent operations. By combining this offering
with the unique audience insight and targeting capabilities of the Cxense Extrordinary Insight Engine
(EIE), we believe we can create a unique and future proof ad serving offering.
The Emediate acquisition was financed through a USD 15 million share issue towards existing and
selected new shareholders.
4
In Q3 2013, the Cxense PCAN segment had revenues of USD 686,000 and EBITDA of USD 18,000,
compared to Q3 2012 revenues of USD 233,000 and EBITDA of USD -93,000. Q3 2013 was the first
quarter with positive results for the PCAN Segment which was established in Q2 2012. The break-even
came as a result of increasing economies of scale through growth in advertisers, better advertising
performance, more participating publishers and increasing gross margin.
PPN AG, the Swiss PCAN, was sold to Tamedia, the largest Swiss publisher, with effect as of 30.06.2013.
The transaction was closed and finalized in Q3 2013. The sale resulted in a gain of USD 0.14 million.
Selected Highlights
Dallas Morning News, the North American online newspaper with more than 5 million unique
visitors each month, launches a new and re-designed premium site and chooses Cxense Content
to power content recommendations to promote increased traffic and enhanced user
engagement
Forecast Communication, the online technology provider controlled by the Nippon Television
Network Corporation of Japan, chose Cxense to replace a number of local search and
recommendation solutions used to power their services
Grupo RBS, one of Brazil’s largest media conglomerates, chose Cxense Content to power
personalized article recommendations on the front page of Zero Hora, Brazil’s sixth largest
online newspaper
Yomiuri of Japan, the largest newspaper in the world by circulation, expands their contract with
Cxense as they see further Cxense Analytics and Content use for their online site
Ringier AG, Switzerlands second largest publisher, expands their contract with Cxense as they
add new Cxense Analytics functionality to gain deeper audience insight
October 17, 2013, after the Q3 reporting period: Dow Jones & Company, the New York based
financial publisher, chooses Cxense Big Data, Advertising and Content to power subscription
optimization on the online edition of the Wall Street Journal, the largest newspaper in the US by
circulation.
5
Outlook
Cxense experiences increasing customer interest for its solutions for real-time analytics, digital
advertising, actionable Big Data processing, content optimization and personalization, and search.
Online publishers and media companies continue to be the main customer focus in the near term, with
interesting market opportunities within the e-commerce sector emerging in the medium term.
The revenue growth outlook for the SaaS segment for the next quarter is good. In Q3 2013 the sales
team sent 44 offer letters vs 23 in Q2.
In the longer term, we also see opportunities in other business verticals for EIE, our Big Data platform,
as companies seek to improve customer understanding, analytics and communication.
Most online companies are experiencing significant growth on new devices and formats, mainly tablets
and mobile smart phones. This requires adaptation of their content and monetization methods. The
Cxense solutions have cross-device support (laptop, mobile tablet) and mobile growth represents a
significant market opportunity for us.
Our commercial product platform addresses large and fast-growing markets. The global online
advertising market is estimated to be more than USD 100 billion this year, and is expected by leading
industry groups to grow to more than USD 200 billion by 2020. The global e-commerce market is
estimated to pass the USD 1,000 billion mark by 2013, and is growing about 20% per year. Industry
analyst group, Gartner expects that Big Data will drive USD 230 billion in IT spending through 2016, up
from USD 96 billion in 2012(1).
About Cxense
Cxense was founded in February 2010. The Company sells Cloud Based Software as a Service (SaaS)
solutions to online content providers and e-commerce companies that want to increase the
functionality, relevance and overall performance on their internet sites. At the same time Cxense
solutions enhance their customer insight and maximize monetization.
Cxense has built the Extraordinary Insight Engine (EIE) for real-time analysis of content, user context,
and behavior. The EIE analyzes the behavior of more than 350 million internet users and deducts their
interest, intent, location, device and much more. The EIE gives our customers a ‘360 degree view’ of
their online consumers.
The EIE is fully integrated with a range of solutions (Cxense Advertising, Analytics, Big Data, Content,
and Search), which are used by Cxense customers to increase advertising revenue, user engagement,
and conversions to digital subscriptions.
6
The solutions based on
the EIE are provided as
SaaS (Software-as-a-
Service) services with
monthly software service
fees and/or royalty
payments dependent on
advertising volume and
transaction levels. The
sale of our SaaS solutions
is reported in the Cxense
SaaS business area and
represents our core
business.
The EIE technology has
several unique aspects: it
is end-to-end real time;
from data capture, through processing to actionable output. It is also mobile optimized through its non-
cookie based data capture methodologies and low bandwidth consumption. With highly flexible APIs
the EIE can power any application and make it context aware.
Cxense has also helped establish a range of publisher-controlled advertising networks (PCANs). The
PCANs act as publisher-controlled broker between the advertisers and the publishers, distributing and
sharing the advertising revenues generated in the network with the publishers. Cxense is advertising
technology provider to the PCANs and charges a fee dependent on the PCAN revenues. In Spain, the
Company has retained a 56% ownership interest and because of majority ownership, this PCAN is
consolidated into the Group Accounts, and is reported in the Cxense PCAN business area.
1) http://techcrunch.com/2012/10/17/big-data-to-drive-232-billion-in-it-spending-through-2016/
7
Cxense group – financial development summary
1) Q2 2013 cont’d excludes the discontinued operations of PPN AG (See note 4 for details). All other quarters are
presented including PPN AG. Segment results excluding the discontinued operations can be found in note 3.
2) Other cost of sales includes the elimination difference from elimination of inter group transactions. For 2011 other cost
of sales also includes governmental R&D cost refunds booked as negative costs.
USD Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013
Q2 2013
cont'd. Qtr 3 2013
IFRS IFRS IFRS IFRS IFRS IFRS IFRS IFRS
SaaS segment
Revenues total 389 419 502 960 674 585 735 271 840 122 992 826 992 826 1 090 826
Hosting 54 837 72 625 83 503 166 757 152 750 171 340 171 340 219 453
Cost of advertising - - - - - - - -
Other cost of sales -44 744 61 111 -26 138 -49 184 -6 323 31 656 31 656 -40 217
Intercompany cost of sales - - - - - - - -
Cost of sales 10 093 133 735 57 365 117 573 146 427 202 996 202 996 179 236
- - - -
Gross profit 379 325 369 225 617 220 617 698 693 695 789 830 789 830 911 591
Gross magin % 97% 73% 91% 84% 83% 80% 80% 84%
Personnel 1 205 758 1 443 490 1 312 416 1 578 515 1 789 784 1 831 715 1 831 715 1 833 079
Other OPEX 217 517 347 722 489 291 221 055 676 238 801 693 801 693 643 470
OPEX 1 423 275 1 791 211 1 801 707 1 799 569 2 466 022 2 633 408 2 633 408 2 476 549
- - - -
EBITDA -1 043 949 -1 421 986 -1 184 487 -1 181 872 -1 772 327 -1 843 578 -1 843 578 -1 564 958
PCAN segment
Revenues total 808 854 976 167 1 437 264 1 374 583 1 534 304 546 680 685 932
- - - - - - Hosting - - - - - - -
Cost of advertising 705 287 815 349 1 158 049 1 140 512 1 091 652 395 242 327 616
Other cost of sales - 61 841 166 362 138 690 44 963 44 963 129 689
Intercompany cost of sales 60 157 87 768 118 331 110 441 125 937 46 821 66 100
Cost of Goods Sold 765 444 964 958 1 442 743 1 389 642 1 262 552 487 026 523 405
- - - - - -
Gross profit 43 411 11 209 -5 479 -15 059 271 753 59 654 162 526
Gross magin % 5% 1% 0% -1% 18% 11% 24%
Personnel 180 292 202 420 225 722 237 597 290 651 123 531 109 202
Other OPEX 118 973 65 695 106 501 97 235 128 717 72 824 35 077
OPEX 299 265 268 115 332 223 334 832 419 367 196 355 144 280
- - - - - -
EBITDA -255 854 -256 906 -337 702 -349 891 -147 615 -136 701 18 247
GROUP
EBITDA -1 043 949 -1 677 840 -1 441 393 -1 519 573 -2 122 218 -1 991 192 -1 980 279 -1 546 712
8
Condensed Financial Report
Q3 2013 Group Revenue for continuing operations amounted to USD 1.71 million, an increase of USD 0.8
million over the same period last year (USD 0.9 million). The increase in Revenue is due to the steady
growth in the number of customers for the Cxense SaaS segment as well as increased advertising sales
for the PCAN business segment. After the sale of PPN AG the PCAN segment now consists of PAN Spain,
the PCAN owned 56% by Cxense AS. The Q3 2013 Revenue from the SaaS Segment was USD 1.09
million for external customers and inter-segment Revenue was USD 0.07 million. Revenue from the
PCAN segment was USD 0.69 million.
The Q3 2013 Cost of Sales amounted to USD 0.64 million, compared to USD 0.26 million in Q3 2012. The
SaaS Segment Cost of Sales for Q3 2013 was USD 0.18 million, while the PCAN segment Cost of Sales was
USD 0.52 million. Cost of Sales within the SaaS segment relates to the hosting of the software
applications used by our customers. Cost of Sales within the PCAN segment relates to revenue share
paid to publishers providing their advertising space, as well as agency commission paid to advertising
agencies. The Q3 2013 Gross Profit for the SaaS segment amounted to USD 0.91 million and USD 0.16
million for the PCAN segment. The Q3 2013 Gross Margin in the continuing operations of the PCAN
segment was 23% compared to 3% in Q3 2012. The improvement is due to the gradual expiration of a
publisher revenue share guarantee clause that originates from the start-up of the continuing PCAN
operations.
The Q3 2013 Employee Benefit Expenses were USD 1.9 million, compared to USD 1.4 million in Q3 2012.
The increase is attributable to the number of employees rising to 63 full-time employees (FTE) from 42
FTE at Q3 2012. For the 26 FTEs in the Norwegian legal entity there is not booked Payroll Expense for
the month of July, as the July payment is booked against the holiday accruals.
The Depreciation Expense in Q3 was USD 0.007 million compared to USD 0.003 million . The
Depreciation Expense is consistently low because the Group has limited non-current assets. The large
distributed cloud- based systems operated by Cxense are hosted on platforms leased from large scale,
reputable hosting suppliers. The Group has limited intangible assets, and the R&D cost is expensed (not
capitalized).
Other Operating Expenses amounted to USD 0.68 million in Q3 2013 and USD 0.54 million Q3 2012.
The majority of the expenses related to marketing and external consulting (audit, legal and other). The
increase is in line with the expansion of the existing SaaS business and the inclusion of the PCAN
subsidiary since Q2 2012. The Q3 2013 Other Operating Expense of USD 0.68 million included a R&D
refund originating in Australia which has been booked as negative cost of USD -0.159 million.
The Finance Income in Q3 2013 was USD 0.94 million, largely relating to interest earned on bank
deposits and cash arising from the share issue proceeds new equity issues in June and December 2013.
Finance Income in Q3 2012 was USD 0.01. Finance Expenses, mostly relating to currency expenses,
amounted to USD 0.055 million in 2013 and USD 0.001 in Q3 2012.
Income Tax Expense for Q3 2013 was USD 0.007 million compared to USD 0.0010 in Q3 2012. The
Income Tax Expense arises in the Cxense SaasS subsidiaries in USA, Japan and Australia that perform
Sales & Marketing and Research & Development activities. In both quarters, the Tax Expenses are
estimates only, with full reviews being performed at year-end.
9
The Group Net Loss from continuing operations amounted to USD 1.5 million in Q3 2013, compared to a
Net Loss of USD 1.3 million in Q3 2012. The continuing PCAN operation incurred a Profit for Q3 2013 of
USD 14,000. Overall the Net Result represents a loss of USD 26 per share, compared to USD 30 per share
in Q2 2012.
During Q3 2013 the accounting entries for sale of the PCAN subsidiary were finalized and recorded
resulting in a gain of USD 0.14 million. Full details of the sale of the PCAN subsidiary are outlined in
Note 4 to the accounts.
Total Assets at the end of Q3 2013 amounted to USD 6.3 million compared to USD 4.5 million at Q3
2012. The increase is predominantly due to the increase in cash and cash equivalents, which amounted
to USD 3.8 million at the end of Q3 2013 and USD 2.4 million at the end of Q3 2012. Trade Receivables
were USD 1.5 million at the end of Q3 2013, compared to USD 1.1 million at the end of Q3 2012. The
increase in Q3 2013 Receivables is due to the growth in external customers billings in the SaaS Cxense
and the PCAN segment.
Total Current Liabilities at the end of Q3 2013 were USD 2.3 million compared to USD 3.0 million at
Q3 2012. The Q3 2012 included the share issue allocation not booked until October and taken up as
payables at Sept 2012.
Net Cash Flow used in Operating Activities was USD 1.9 million in Q3 2013, compared to USD 0.6 million
in Q3 2012.
The Available Liquidity as of the 30.09.2013 Balance Sheet is deemed to be adequate for the remaining
2013 year.
10
Consolidated Income Statement (unaudited)
USD 1,000 Note
Q3 ended
30 Sept 2013
Q3 ended
30 Sept
2012
9 mnths to 30
Sept 2013
9 mnths to
30 Sept
2012
Year ended
31 December
2012
Year ended
31 December
2011
Continuing operations:
Revenue 3, 4 1,710 887 4,399 1,896 2,961 435
Operating expense
Cost of goods sold 3 636 264 1,847 525 1,061 (280)
Employee benefit expense 5 1,942 1,365 5,774 4,074 5,700 4,000
Depreciation expense 7 3 16 14 21 17
Other operating expense 6 679 538 2,283 1,165 1,446 930
Total operating expense 3,263 2,169 9,919 5,777 8,228 4,667
Net operating income/(loss) (1,553) (1,282) (5,520) (3,881) (5,266) (4,232)
Financial income and expense
Finance income 4 94 10 276 34 91 76
Finance expense (55) (10) (83) (19) (97) (16)
Net financial income/(expense) 39 0 193 15 (7) 60
Net income/(loss) before taxes (1,514) (1,282) (5,327) (3,866) (5,273) (4,171)
Income tax expense 7 10 25 12 33 11
Net income/(loss) for the period from continuing operations (1,521) (1,292) (5,352) (3,878) (5,306) (4,183)
Discontinued operations
Net income/(loss) for the period from
discontinuing operations 4 143 (165) (24) (297) (442) 0
Total net income/(loss) for the period (1,379) (1,457) (5,377) (4,175) (5,748) (4,183)
Net income/(loss) attributable to:
Owners of the Company (1,385) (1,424) (5,231) (4,079) (5,564) (4,183)
Non-controlling interests 6 (41) (146) (96) (183) 0
Earnings per share:
Basic and diluted 7 (0.26) (0.30) (0.41) (0.43) (0.57) (0.53)
Statement of comprehensive income
USD 1,000
Q3 ended
30 Sept 2013
Q3 ended
30 Sept
2012
9 mnths to 30
Sept 2013
9 mnths to
30 Sept
2012
Year ended
31 December
2012
Year ended
31 December
2011
Net income/(loss) for the period (1,379) (1,456) (5,377) (4,175) (5,748) (4,183)
Other comprehensive income:
- Currency translation differences 5 (234) 102 5 (72) 264
Total comprehensive income/(loss) (1,373) (1,689) (5,274) (4,169) (5,820) (3,919)
Total comprehensive income/(loss) attributable to:
Owners of the Company (1,379) (1,648) (5,128) (4,073) (5,636) (3,919)
Non-controlling interests 6 (41) (146) (96) (183) 0
11
Consolidated Statement of Financial Position
USD 1,000 Note
9 mnths to
30 Sept 2013
9 months to
30 Sept 2012
As at 31 December
2012
Assets
Non-current assets
Deferred tax asset 18 3 14
Intangible assets 6 2 2
Office machinery, equipment,etc. 74 68 82
Other financial assets 18 63 12
Total non-current assets 116 136 110
Current assets
Trade receivables 8 1,479 1,066 1,873
Other short-term assets 9 840 850 764
Cash and cash equivalents 3,841 2,408 10,210
Total current assets 6,159 4,325 12,847
Total assets 6,276 4,460 12,958
USD 1,000 Note
9 mnths to
30 Sept 2013
9 months to
30 Sept 2012
As at 31 December
2012
Equity and liabilities
Equity
Share capital 10 2,113 1,767 2,269
Other paid in capital 8,197 4,243 13,803
Currency translation differences 304 279 201.4
Retained earnings (6,380) (4,750) (6,453)
Equity attributable to the holders of the Company 4,233 1,538 9,820
Non-controlling interest 13 (271) (94) (125)
Total equity 3,962 1,444 9,695
Liabilities
Non-current liabilities
Deferred tax liabilities - - -
Total non-current liabilities - - -
Current liabilities
Trade payables 886 1,153 1,651
Current taxes 66 27 76
Other short-term liabilities 11 1,361 1,836 1,536
Total current liabilities 2,313 3,017 3,263
Total liabilities 2,313 3,017 3,263
Total equity and liabilities 6,276 4,460 12,958
12
Consolidated Statements of Changes in Equity
USD 1,000
Nominal
share
capital
Other paid
in capital
Currency
translation
differences
Retained
earnings
Attributable to
owners of
parent company
Non
Controlling
interest
Total
equity
Total equity as at 1 January 2012 1,505 4,939 273 (4,663) 2,054 0 2,054
0
Profit for the period (4,079) (4,079) (96) (4,175)
Other comprehensive income 5 5 0 5
Total comprehensive income/(loss) for nine months
ending 30 September 2012 0 5 (4,079) (4,073) (96) (4,169)
Reduction of paid in capital (4,190) 4,190 0 0
Increase in share capital 192 3,265 3,457 2 3,459
Currency effects from translation of equity 70 229 (199) 100 100
Total equity as at 30 September 2012 1,767 4,243 279 (4,750) 1,538 (94) 1,444
0
USD 1,000
Nominal
share
capital
Other paid
in capital
Currency
translation
differences
Retained
earnings
Attributable to
owners of
parent company
Non
Controlling
interest
Total
equity
Total equity as at 1 January 2013 2,269 13,803 201 (6,453) 9,820 (125) 9,695
0 0
Profit for the period (5,231) (5,231) (146) (5,377)
Other comprehensive income 102 102 102
Total comprehensive income/(loss) for the nine
months ending 2013 0 102 (5,231) (5,128) (146) (5,274)
Reduction of paid in-capital (4,878) 4,878 0 0
Transaction costs 0 0
Share- based payments 125 125 125
Increase in share capital 6 136 142 142
Currency effects from translation of equity (162) (988) 425 (726) (726)
Total equity as at 30 September 2013 2,113 8,196 304 (6,380) 4,233 (271) 3,962
13
Consolidated Statement of Cash Flow
USD 1,000 Note
Q3 ended 30
Sept 2013
Q3 ended 30
Sept 2012
YTD to 30
Sept 2013
YTD to 30
Sept 2012
Year ended
31 December
2012
Cash flow from operating activities
Profit / (loss) before income tax (1,373) (1,442) (5,352) (4,162) (5,715)
Adjustments:
Income tax payable (3)
Share- based payments 5 98 147 53
Result from investment in associates 52
Depreciation and amortization 7 3 16 14 23
Currency translation effects 118 79 (623) 105 (113)
Change in trade receivables 872 (463) 395 (930) (1,737)
Change in trade payables (500) 799 (765) 1,104 1,602
Change in other accrual and non-current items (1,375) 255 (372) 893 750
Net cash flow from / (used in) operating activities (2,153) (768) (6,554) (2,975) (5,088)
Cash flow from investing activities
Investment in furniture, fixtures and office machines (5) 2 (8) (11) (34)
Investment in intangible assets (0) (0) (4) (2) (2)
Investment in associated companies (52)
Net cash effects from disposal subsidiary (1) 55 55
Net cash flow from / (used in) investing activities 50 2 43 (13) (87)
Cash flow from financing activities
Net proceeds from share issues 142 192 142 3,457 13,390
Proceeds from minority interest 2 2 58
Net cash flow from / (used in) financing activities 142 194 142 3,459 13,448
Net increase/ (decrease) in cash and cash equivalents (1,961) (572) (6,369) 471 8,272
Cash and cash equivalents at the beginning of the period 5,802 2,980 10,210 1,938 1,938
Cash and cash equivalents at the end of the period 3,841 2,409 3,841 2,409 10,210
(1) Cash effects are net of cash received on sale of subsidiary, and cash held by the subsidiary.
14
Notes to the Consolidated Financial Statements
Note 1 General information
Cxense AS, which is the parent Company of the Cxense group (the Group), is a limited liability company
incorporated and domiciled in Norway, with its corporate headquarters in Oslo. The Group is a global
technology company delivering innovative and intuitive products that help clients build unique online
experiences.
The Company’s Board of Directors approved the financial statements on November 18, 2013.
These financial statements are unaudited.
Note 2 Basis of preparation and accounting policies
The principal accounting policies applied in the preparation of these consolidated financial statements
are set out below.
The Consolidated Financial Statements have been prepared in accordance with International Financial
Reporting Standards (IFRS) as adopted by the European Union (EU) and in accordance with the
additional requirements following the Norwegian Accounting Act.
The accounting policies applied in this Condensed Consolidated Interim Financial Report are consistent
with those applied and described in the latest Consolidated Annual Financial Statements.
The going concern assumption has been applied when preparing this interim financial report.
15
Note 3 Segment information
Q3 ended 30 Sept 2013
USD 1,000 Cxense SaaS PCAN Eliminations Consolidated
Revenue
External customers 1,024 686 0 1,710
Inter-segment 67 0 (67) 0
Revenues total 1,091 686 (67) 1,710
Cost of goods sold 179 523 (67) 636
Gross profit 912 163 (0) 1,074
Employee benefit expense 1,833 109 0 1,942
Depreciation expenses 6 1 0 7
Other operating expense 643 35 0 679
EBIT (1,571) 17 (0) (1,554)
Net finance income/(expense) 41 (3) 0 38
Income tax income/(expense) (7) 0 0 (7)
Net income/(loss) before continuing operation (1,537) 14 (0) (1,523)
Net income/(loss) for the period from discontinuing operations 0 143 143
Total net income/(loss) for the period (1,537) 157 (0) (1,379)
For management purpose the Group is organized into business units based on its product and services and has two reportable segments:
- Cxense Saas, which sells software-as-a-service applications based on the Extraordinary Insight Engine™ (EIE™) for real-time analysis of
content, user context, and behaviour. The EIE is fully integrated by a range of applications (web analytics, recommendations, search and
targeted advertising), which are used by Cxense customers to improve their online businesses by increasing advertising revenue, page
views, readership and conversion.
- Publisher-Controlled Advertising Networks (PCANs) which sell online advertising on the sites of various publishers, and distribute and
share the advertising revenues generated in the network with publishers.
Segment performance is evaluated by the management based on operating profit or loss and is measured consistently with operating profit
in the financial statements. Transfer prices between operating segments are on an arm's length basis in a manner similar to transactions with
third parties.
Discontinued operations:
To be consistent with the presentation in the income statement and statement of financial position, the PCAN segment presented below is
exclusive to the discontinued operations. Furthermore, Cxense SaaS sale to the discontinued operation is presented as a sale to external
customers.
16
9 mnths to 30 Sept 2013
USD 1,000 Cxense SaaS PCAN Eliminations Consolidated
Revenue
External customers 2,787 1,613 4,399
Inter-segment 137 (137) 0
Revenues total 2,924 1,613 (137) 4,399
Cost of goods sold 529 1,455 (137) 1,847
Gross profit 2,395 158 0 2,553
Employee benefit expense 5,455 319 0 5,774
Depreciation expenses 14 2 0 16
Other operating expense 2,121 161 0 2,283
EBIT (5,195) (325) 0 (5,520)
Net finance income/(expense) 199 (6) 0 193
Income tax income/(expense) (25) 0 0 (25)
Net income/(loss) before continuing operation (5,021) (331) 0 (5,352)
Net income/(loss) for the period from discontinuing operations 0 (24) (24)
Total net income/(loss) for the period (5,021) (356) 0 (5,377)
Balance sheet information 30 Sept 2013
USD 1,000 Cxense SaaS PCAN
Eliminations
and
unallocated Consolidated
Segment assets:
Non-current assets 0 0 116 116
Current assets
- Trade receivables 837 641 1,479
- Other short term assets 980 (78) (63) 840
- Cash and cash equivalents 3,644 197 3,841
Total segment assets 5,462 760 54 6,276
Segment liabilities:
Non-current liabilities 0 0 0 0
Current liabilities 1,256 1,090 (33) 2,313
Total segment liabilities 1,256 1,090 (33) 2,313
17
PCAN segment in 2012:
Q3 ended 30 Sept 2012
USD 1,000 Cxense SaaS PCAN Eliminations Consolidated
Revenue
External customers 654 233 0 887
Inter-segment 20 0 (20) 0
Revenues total 674 233 (20) 887
Cost of goods sold 57 227 (20) 264
Gross profit 616 7 0 623
Employee benefit expense 1,312 52 0 1,364
Depreciation expenses 3 0 0 3
Other operating expense 490 48 0 537
EBIT (1,188) (93) 0 (1,281)
Net finance income/(expense) 1 (1) (1) (0)
Income tax income/(expense) (10) 0 0 (10)
Net income/(loss) before continuing operation (1,197) (94) (1) (1,291)
Net income/(loss) for the period from discontinuing operations 0 (165) 0 (165)
Total net income/(loss) for the period (1,197) (259) (1) (1,457)
9 mnths to 30 Sept 2012
USD 1,000 Cxense SaaS PCAN Eliminations Consolidated
Revenue
External customers 1,546 351 0 1,896
Inter-segment 21 (21) 0
Revenues total 1,567 351 (21) 1,896
Cost of goods sold 201 345 (21) 525
Gross profit 1,366 6 0 1,372
Employee benefit expense 3,962 112 0 4,074
Depreciation expenses 14 1 0 14
Other operating expense 1,055 110 0 1,165
EBIT (3,664) (217) 0 (3,881)
Net finance income/(expense) 17 (2) 0 15
Income tax income/(expense) (12) 0 0 (12)
Net income/(loss) before continuing operation (3,660) (218) 0 (3,878)
Net income/(loss) for the period from discontinuing operations 0 (297) 0 (297)
Total net income/(loss) for the period (3,660) (515) 0 (4,175)
The business incorporated as the PCAN segment was established at the beginning of Q2 2012.
18
Balance sheet information 30 sept 2013
USD 1,000 Cxense SaaS PCAN
Eliminations
and
unallocated Consolidated
Segment assets:
Non-current assets 0 0 136 136
Current assets
- Trade receivables 671 627 (231) 1,066
- Other short term assets 370 477 3 850
- Cash and cash equivalents 2,282 127 2,408
Total segment assets 3,322 1,231 (92) 4,460
Segment liabilities:
Non-current liabilities 0 162 (162) 0
Current liabilities 1,673 1,496 (152) 3,017
Total segment liabilities 1,673 1,658 (314) 3,017
Geographic information
Revenues from external customers:
9 mnths to 30
Sept 2013
9 months to
30 Sept 2012
Year ended
31 December 2012
EMEA 4,957 2,261 3,933
Americas 631 330 502
Pacific 635 611 826
Total revenue from external customers 6,223 3,202 5,260
Information about major customersThe Company does not have single customers that generate 10% or more of the entity's total revenue.
The revenue information above is based on the location of the entity generating the revenue and includes sales generated by discontinued
operations. Revenues from discontinued operations is included and has solely been booked to the EMEA segment in the table above.
19
Note 4 Discontinuing operations
Profit from the discontinued operations
USD 1,000
9 mnths to 30
Sept 2013 (1)
9 mnths to 30
Sept 2012
Year ended
31 December
2012
Revenue 1,982 1,433 2,515
Operating expenses 2,139 1,730 2,954
Net operating income/(loss) (156) (297) (440)
Net finance (11) 0 (2)
Income tax expense 0 0 0
Gain from sale of discontinued operation 143 0 0
Net income/(loss) for the period from discontinuing operations (24) (297) (442)
(1) All of operating income in 2013 comes from the six months ending 30 June, since the subsidiary was sold effective from 1
July 2013.
Earnings per share:
Basic and diluted (0.002) (0.031) (0.045)
Cash flow from discontinuing operations
USD 1,000
9 mnths to 30
Sept 2013 (1)
9 mnths to 30
Sept 2012
Year ended
31 December
2012
Net cash flow from operating activities (88) (273) (469)
Net cash flow from investing activities 0 (9) (7)
Net cash flow from financing activities 0 0 58
Net cash inflow/(outflow) (88) (282) (417)
(1) All of operating income in 2013 comes from the six months ending 30 June, since the subsidiary was sold effective from 1
July 2013. Cash effects from disposal are not included in the cash flow summary above.
At the end of Q2 2013 Cxense negotiated an agreement to sell the PCAN subsidiary PPN AG to Tamedia AG, the Swiss
based media group. The transaction is effective as of July 1, 2013. PPN AG is presented as discontinuing operations through
out this report.
Tamedia AG has been the most significant publisher in the Publisher Controlled Advertising Network alongside a number
of other publishers in the Swiss market. Tamedia states that the rationale for the transaction is to improve the control of PPN
and to use PPN as part of their strategy to develop an exclusive networked advertising offering for their online publications.
Tamedias intention is to continue to cooperate with the other existing publishers in PPN around click-based performance
advertising.
One hundred percent of the shares in PPN AG were sold for USD 103 thousand. The final transaction values have subject
to a separate audit of the PPN AG accounts and now fully finalised. The sale resulted in a gain of USD 143 thousand.
20
Note 5 Employee benefit expense
Specification of employee expense
USD 1,000 Q3 2013 Q3 2012
9 mnths to
30 Sept 2013
9 mnths to
30 Sept 2012
Year ended
31 December
2012
Payroll expense 1,603 1,367 5,080 3,763 5,226
Share-based payments 98 0 147 0 53
Social security tax 147 100 506 317 464
Pensions 74 44 179 134 219
Other personnel expense 19 4 179 130 186
Presented as part of discontinued operations (0) (151) (318) (271) (449)
Total employee benefit expense 1,942 1,365 5,774 4,074 5,700
Note 6 Other operating expense
Specification of other operating expense
USD 1,000 Q3 2013 Q3 2012
9 mnths to
30 Sept
2013
9 mnths to
30 Sept 2012
Year ended
31 December
2012
Audit, legal and other consulting fees 321 177 843 324 431
Office rental and related expenses 120 147 354 304 343
Marketing and representation 148 74 529 173 263
Travel expenses 205 107 595 295 474
Other operating expense (115) 51 62 144 56
Presented as part of discontinued operations 0 (18) (100) (75) (121)
Total other operating expense 679 538 2,283 1,165 1,446
Note 7 Earnings per share
USD 1,000 Q3 2013 Q3 2012
9 mnths to
30 Sept
2013
9 mnths to
30 Sept
2012
Year ended
31 December
2012
Net income/(loss) for the year attributable to the
parent company (3 232) (3 039) (5 231) (4 079) (5 564)
Weighted average number of shares outstanding
for basic earnings per share 12 653 10 118 12 638 9 484 9 763
Earnings per share
- Basic (0,26) (0,30) (0,41) (0,43) (0,57)
- Diluted (1) (0,26) (0,30) (0,41) (0,43) (0,57)
(1) The Company has 534 potential dilutive shares from share options outstanding. Since the Group has a loss for the
period, and since the the potential shares do not have a dilutive effect, they are not included in the calculation.
21
Note 8 Trade receivables
USD 1,000
9 mnths to
30 Sept
2013
9 mnths to
30 Sept
2012
Trade receivables 1 484 1 074
Allowance for doubtful debts (5) (8)
Total trade receivables 1 479 1 066
Trade receivables are non-interest bearing and are generally on 30-day terms.
As at 30 Sept 2013, the ageing analysis of trade receivables is as follows:
USD 1,000
Total
Neither past
due nor
impaired
<30
days 31-90 days >90 days
30 Sept 2013 1 484 910 187 314 72
30 June 2012 1 074 468 217 278 110
Movements in allowance for doubtful debt: Sept Sept
USD 1,000 2013 2012
Balance at the beginning of the year 30 0
Impairment losses recognized on receivables 16 8
Amounts written off during the year as uncollectible (41) 0
Amounts recovered during the year 0 0
Impairment losses reversed 0 0
Balance at the end of the year 5 8
Past due but not impaired
At the time of this report USD 143 thousands of the amount more than 31 days overdue at
30 Sept 2013 had been collected.
22
At 30.09.2013 Cxense AS had 410 outstanding share options, issued according to the Share Option
Program established in September 2012.
Note 9 Other short-term assets
USD 1,000
9 mnths to 30
Sept 2013
9 mnths to 30
Sept 2012
Year ended
31 December
2012
Accrued income 23 486 64
Prepayments 136 44 48
Receivable on authorities and government grants 546 280 509
Other short-term receivables 134 40 143
Other short term assets 840 850 764
Note 10 Share capital and shareholder information
Number of
shares
Share capital
NOK
Share capital
USD
Balance at 1 January 2012 9,018 9,018,000 1,505
Issued during the year 3,612 3,612,000 764
Balance at 31 December 2012 12,630 12,630,000 2,269
Issued during the year 37 37,000 0
Balance at 30 September 2013 12,667 12,667,000 2,113
Nominal value per share at 30 September 2013 is Norwegian Krone (NOK) 1 000. Cxense AS has one class of shares
with equal rights for all shares.
Note 11 Other short-term liabilities
USD 1,000
9 mnths to 30
Sept 2013
9 mnths to 30
Sept 2012 31 Dec 2012
Public duties payables 152 97 202
Prepayments from customers 209 119 480
Accrued expenses 342 218 327
Salary-related provisions 383 150 376
Other current liabilities 275 1,253 150
Total other short-term liabilities 1,361 1,836 1,535
23
Note 12 Related party disclosure
USD 1,000
Purchase of services from Description of services9 months to 30
Sept 2013
9 months to 30
Sept 2012 31 Dec 2012
Advokatfirma Ræder (1) Legal services 27 86 118
Theoline AS (2) Consulting services 47 9
(1) The Chairman of the Board in Cxense AS is a partner in Advokatfirma Ræder.
(2) Stig Eide Sivertsen, Board member, is the owner of Theoline AS
(3) Autoscale Group is controlled by Marco Billeter and Tony Hrnek, Managing Directors of PPN Switzerland AG
USD 1,000
Balances with related parties Balance type9 months to 30
Sept 2013
9 months to 30
Sept 2012 31 Dec 2012
Advokatfirma Ræder Trade payables 0 5 102
Theoline AS Trade payables 10 - 9
Autoscale Group AG (3) Loan 83 82 82
Balances and transactions between the Company and its subsidiaries, which are related parties to the Company, have been eliminated
on consolidation and are not disclosed in this note. The group does not have other transactions with related parties, except for
remuneration to management as disclosed below:
Note 13 Subsidiaries
Name of subsidiary
Place of
incorporation
Portion of ownership and
voting power
Cxense Ltd. Cxense SaaS Australia 100%
Cxense Co., Ltd. Cxense SaaS Japan 100%
Cxense, Inc. Cxense SaaS USA 100%
Cxense Inc. NV Holdings Cxense SaaS USA 100%
Premium Audience Network, s.l.u. PCAN Spain 56%
Principal activity according to
segment
On 1st July 2013, PPN Schweiz AG a wholly owned subidiary was sold to Tamedia AG. See Note 4 for details.
24
Note 14 Contingent liabilities
Note 15 Events after the reporting period
Acquistion of new operations for the Cxense SaaS segment:
Issue of Shares and allocation of share options:
The Group has not been involved in any legal or financial disputes in Q3 2013 or Q3 2012, where an
adverse outcome is considered more likely than remote.
Since Sept 30, 2013 and until the date of these financial statements, the Board of directors is not aware
of any matter or circumstance not otherwise dealt with in this report, that has significantly or may
significantly affect the operations of the Consolidated Entity with the exception of the following:
At 30.09.2013 there were 12667 shares outstanding in Cxense AS. At the date of this report the Cxense
Board of Directors had closed one smaller employee share issue of 35 shares, each at a price of NOK
23000 per share. In additon also a larger share issue of 3691 shares, each at a price of NOK 25000, to
secure the financing of the Emediate acqusition as well as growth capital for Cxense. At the time of the
report both share issues were awaiting registration in the Company Register and in the Norwegian
Central Securities Depository (VPS). For the employee share issue the BoD utilized the authorization to
issue shares given at the 2013 Annual General Meeting. For the share issue of 3691 shares the BoD
used their authorization to issue shares given on the EGM at November 1st 2013.
At 30.09.2013 there were 410 outstanding share options in Cxense. Between 30.09.2013 and the date of
this report 124 share options were allocated and consequently the number of outstanding share
options at the time of this report was 534.
On November 15, 2013, Cxense closed and announced the acqusition of Emediate, the leading Nordic
ad serving technology. Emediate has about 150 customers, predominantly European based media
companies. Emediate has legal entities in Denmark, Sweden and Norway. Cxense acquired Emediate for
EUR 7.43 million including estimated net cash and estimated normalized working capital of EUR 0.53
million (I.e. EUR 6.9 million on a debt/cash free basis). The estimated net cash and normalized working
capital calculation is subject to adjustment as of the balance sheet of the closing date as well as an
audit of that balance sheet. The acquired operations had proforma unaudited 2012 revenues of USD 6.1
million and EBITDA of 0.8 million. The acqusition was financed by the proceeds from a share issue in
Cxense AS.